Disney earnings climb; few economic woes seen

LOS ANGELES (MarketWatch) -- Fourth-quarter earnings at Walt Disney Co. climbed 12% as the entertainment giant said Thursday that it posted growth throughout operations, and added that it has yet to see an impact from current economic concerns.

Reporting after the close, Disney
DIS, +2.14%
announced that net income was $877 million, or 44 cents a share, compared with $782 million or 36 cents a share from a year ago. Sales at the Burbank, Calif.-based entertainment conglomerate were $8.93 billion vs. last year's $8.65 billion.

Excluding tax gains from a year ago, the company said that earnings per share amounted to 42 cents a share. Analysts polled by Thomson First Call expected the company to post earnings of 41 cents a share on sales of $8.98 billion.

Disney shares had ended trading Thursday up 13 cents to $33.63.

Analysts noted that Disney beat street estimates for all the eight quarters Iger has been chief executive, something not always seen under the previous stewardship of Michael Eisner.

"I'm almost at the point where I'm calling Iger the anti-Eisner," said Rick Munarriz, analyst at the Motley Fool. "The company's still underpromising and overdelivering."

The current credit crunch, weak dollar and high energy costs don't seem to be impacting the company's operations -- not even the theme-park operations, which some consider vulnerable to economic fluctuations, executives said.

"We're not now as much an indicator as we used to be," Chief Executive Robert Iger said in a conference call with analysts, who also noted that vacations to Disney parks aren't being planned as far in advance as they used to be.

Instead of preparing two to three quarters ahead, vacationers usually are planning one to two quarters at most. But the numbers for the next two quarters look strong, according to Iger.

Chief Financial Officer Thomas Staggs had told reporters earlier that $100 oil likely wouldn't affect the parks. An energy shortage like in the 1970s could have an impact, but higher costs have yet to be felt operations, he said.

"Thus far, our business remain strong and we have not seen indications of a downturn," Staggs added.

Executives said that they didn't expect the current writers' strike to affect television operations, unless it lasts for an extended period.

Sales at the parks were up 10% to $2.8 billion, while operating income rose 9% to $430 million, the company reported. Iger pointed out that despite a weak dollar, Disney isn't seeing a strong increase in international visitors to domestic parks.

Iger and Staggs also said that they didn't expect the current writers' strike to affect television operations, unless it lasts for an extended period. The company is prepared with a number of scripted shows, though it may start broadcasting reruns to keep an inventory of new shows in the pipeline at least through the end of the season.

A 25% gain in operating earnings at its media-network operations, to $1.07 billion, was driven by higher affiliate revenue at ESPN, international Disney Channels and domestic operations.

ESPN also benefited from higher advertising revenue, due in part to the addition of Nascar programming. The ABC network saw gains in DVD sales of its "Desperate Housewives," "Grey's Anatomy" and "Lost" series.

Studio entertainment, while up for the year, lost 21% in operating income to $170 million. A year ago, the studio was seeing significant gains from the DVD release of "Pirates of the Caribbean: Dead Man's Chest," Disney said.

Sales at the consumer-products division rose 5% to $590 million and operating income was up 10% to $153 million. Iger said that one franchise in particular, its 2006 co-production with Pixar, "Cars," is helping fuel growth. Roughly 85 million die-cast cars based on the film have been sold, he announced.

"It's one of the strongest toy franchises out there," he commented. "We have high hopes for it in 2008 and beyond."

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